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Step-by-Step Guide to record opening balance in QuickBooks

Record opening balance in Quickbooks


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a year ago | 4 min read

QuickBooks Opening balance equity is the offsetting entry used while entering account balances into the software. This account is needed when the previous account balances are initially being set up in Quickbooks. Opening balance is basically the amount that is found to be in your company’s account at the beginning of a new financial year or period. This is known as the first entry that is done when a company starts its processes after the end of the previous one. Before you begin using QuickBooks for your accounts, you need to create and record opening balance in QuickBooks. Take care when you enter this data, as it can be difficult to change the initial opening balance once the new company file has been created. 

Moreover, It is the first amount that is carried forward at the start of a fiscal year or the accounting period from the prior tenure. It must be treated as the very first entry in your account books. From this point, you can start counting all your liabilities, expenses, assets, etc. If you want to know more in detail about how to record opening balance equity in QuickBooks, read out this write-up till the end.

How can I record opening balance in QuickBooks?

When creating a new account in QuickBooks Desktop, you need to choose a particular day to start tracking all of your transactions. Also, you’ve to enter the balance for your real-life bank account for the day you select. By doing so, QuickBooks matches your bank records from the beginning.

While creating an account, if you forgot to enter an opening balance, don't worry. You can easily go back later and create a journal entry to record it. Then you can get back to your business as usual.

Step 1: Ensure that you don't already have an opening balance

  1. First of all, navigate to Bookkeeping or Accounting, then choose the Chart of accounts.
  2. Now, locate the account and select View register from the Action column.
  3. You need to look for an opening balance entry. In the Payee Account column, it must say Opening Balance Equity, and it should say Opening Balance in the Memo column.

Don't go further in case you see an opening balance entry. Write down the date and amount. Use your bank statements to check if the opening balance is correct or not.

However, if you fail to record opening balance in QuickBooks, write down the date and amount of the oldest transaction in the account.


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Step 2: Create a Journal entry

  1. To start off, you need to select + New.
  2. Now, choose the Journal entry option.
  3. You need to enter a date that comes before the oldest transaction in the account. This would be the opening balance date.
  4. In the first row of the Account column, hit the dropdown menu to select the account you wish to enter the opening balance for.
  5. Thereafter, you must add a note in the Description field so that you know what the journal entry is for.
  6. Under the second row of the Account column, tap on the dropdown and choose Opening Balance Equity.
  7. Next, use the bank statements to enter the balance of your real-life account on the particular date you’ve selected as the opening balance. You need to enter a debit and a credit to keep things accurate. Then, just enter the debits and credits based on the type of account you've typed in the first row.
  • Asset (savings/ checking) and expense accounts: Enter the opening balance under the Debit column on the first row. Then, you must type the same amount under the Credit column in the second row.
  • Liability, equity, and income accounts: When you enter the opening balance under the Credit column in the first row, type the same amount under the Debit column in the second row.
  • Accounts Payable: In the first row in the Name field, choose the vendor you owe money from. You've to enter the opening balance as a credit to enhance the balance. Or need to enter the opening balance as a debit to minimize the balance. Later on, you’ve to type the same amount under the opposite column on the second row.
  • Accounts Receivable: Under the first row under the Name field, choose the customers who owe you money. Enter the opening balance as a debit if you wish to increase the balance. Or enter the opening balance as a credit if you want to minimize the balance. Then, you’ve to type the same amount in the opposite column on the second row.
  1. Once you're ready, press Save and close.

Step 3: Set the journal entry as reconciled

  1. In the inception, head to Accounting, then choose the Chart of accounts option.
  2. Next, you need to locate the account and click on View register from the Action column.
  3. After this, search for the journal entry you just created. Select it to expand the view.
  4. Hit the box in the checkmark column until you see an R. It reconciles the journal entry.
  5. If you're done with this, tap on Save.

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Wrap-up!

Is it challenging for you to answer how to record opening balance in QuickBooks? Don’t panic: here’s the right solution for you. It is noticed that while using QuickBooks for your accounts, all you need to do is to create an opening balance. But it is important to be extra careful while entering the data as the initial opening balance cannot be changed once you create a new company file. Hence, you are advised to ping our certified experts at a Toll-free number +1-(855)-955-1942 to get all your doubts cleared in one go.

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